Essays on Shifts Demand Curve and Movement Along the Demand Curve Assignment

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The paper "Shifts Demand Curve and Movement Along the Demand Curve" is a wonderful example of an assignment on macro and microeconomics. The demand curve is negatively sloped for virtually all goods represented in the graph. However, there is a range on the level of responsiveness according to the type of good, and the economic cycle, which determines the steepness of the slopes. The demand curve has two changes in respect to the factors affecting consumers or goods, the shift in the demand curve, and the movements along the demand curve.

Logically, movement along implies the curve remains in the same point, but the point changes, while a shift in demand curve means the change in position of the curve; the demand curve (O'Sullivan & Sheffrin 2003 p. 81). The two movements are distinct. According to Tucker (2010), Movement along the demand curve is a change in amount, quantity demand, when the cost of purchase of good changes. It is important to note that the price is the only factor that causes movement along the demand curve. On the other hand, a shift in demand is caused by all the remaining factors, that impact on changes in quantity demanded, price being at ceteris paribus (Arnold 2008).

A shift in demand is the change in position of the demand curve, caused by a non-price factor of demand, yielding to a new demand curve. In essence, shifts in demand are caused by determinants, whose changes will make a consumer to purchase a more or less of a good, when the price of the good remains constant (Binger & Hoffman 1998). The earthquake and nuclear explosions in Japan have resulted in a left shift of the demand curve.

This has been due to low output and high prices. The rise in prices seemed desirable for the policy institutors, who apparently had anticipated for a deflation. However, the rise in inflation to over 4% reported by the World Bank and specific focus in Japan indicated a crisis that has worsened its demand for goods. This will translate to, few investors expected and contracts in the sterling pound. Hence, such a disaster translated in the demand curve, will give a movement along a demand curve caused by increasing prices.

On the other hand, the aggregate loss in income, production, and output will translate in shifts in the demand curve to the left, due to the negative effects of the curve (O'Sullivan & Sheffrin 2003 p. 82).

References

Arnold, R. A, 2008, Microeconomics, London, Cengage Learning.

Binger, B & Hoffman, E, 1998, Microeconomics with Calculus, 2nd ed: A change in relative

price changes the distribution of income which in turn changes the demand curve, London: Addison-Wesley.

Biz/ed 2011, Movements of a Demand Curve [Virtual Learning Arcade], Retrieved March

29, 2011, from http://www.bized.co.uk/virtual/vla/theories/demand_curve_movements.htm

OnLineTexts.com, Inc 2003, Introduction to Macroeconomics: Supply and Demand,

Retrieved March 29, 2011, from http://www.econweb.com/MacroWelcome/sandd/notes.html

O'Sullivan, A, & Sheffrin, S. M, 2003, Economics: Principles in action, Upper Saddle River, New Jersey: Pearson Prentice Hall. pp. 81–82.

Tucker, I.B, 2010, Survey of Economics, USA: South-western publishers, pp.101-203.

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